17 CALF News • April | May 2022 • All rights reserved. Case IH is a trademark registered in the United States and many other countries, owned by or licensed to CNH Industrial N.V., its subsidiaries or affiliates. YOU NEED SPEED AND PRODUCTIVITY. SO LET’S JUST CUT TO THE CHASE. When you’re a large acreage or commercial hay producer, being able to cut more hay in less time is critical. And, when it comes to getting the most from your windrower, nothing tops RD3 series disc heads. Their full-length auger optimizes feeding and are designed for a range of crop types, ensuring hay quality, maximum productivity and long service life. Experience best-in-class productivity with RD3 series disc heads. Only from Case IH. What that portends for the U.S. beef business remains to be seen. Perhaps, by the time you read this, the picture will be a bit clearer. But any grain prognostication is essentially impossible while the invasion continues. Looking at the cattle market, however, it’s the input side that appears more at risk. Given that, here’s what Kevin Good, CattleFax’s most senior analyst, had to say. Looking back, he said beef producers expanded the cattle herd by 6 million from 2014 to 2018. Then drought and prices brought on a 3-million-head liquidation the past three years. “Unfortunately, as Matt laid out in the weather forecast, we probably are going to face another year of liquidation in 2022,” he told beef producers. At the same time, consumer demand for beef was trending higher. Looking back, he said beef prices, both wholesale and retail, increased at twice the rate of inflation over the past 20 years. “That means there’s more real dollars that have come into our business. During that same time frame, we’ve seen our share of the retail dollar go from 40 percent to 48 percent. We’re gaining market share. We’re producing a better product. We think the dollars are there and we’ll continue to see an upward track.” That’s the good news. “But at the same time, we’ve got to recognize that we have a major headwind as we think about the drought cycle we’re in,” he said. As this was written, around 60 percent of the country was dealing with some degree of drought. That means the all-time high of 65 percent set in 2012 could well be breached. Thus, a scenario of forced liquidation in the face of higher prices across all sectors of the beef business will likely be 2022’s legacy. That turn of the cattle cycle will return leverage to the production segment for perhaps three to four years as smaller calf crops come to fruition. For cattle feeders, however, those smaller calf crops will be augmented by the growing numbers of beef-on-dairy crosses.“That number is probably somewhere close to 3 million today out of the 9-plus million head of dairy cows. And it’s only going to get bigger as we go forward, in our opinion.” Will that be enough to affect calf and yearling prices? Not likely. Here’s why. For beef producers in areas where it does rain, calf values will be high enough to encourage staying the course, if not expanding, Good said. As cattle feeders entered the year, the feeder cattle supply outside of feedyards was down 700,000 head.What’s more, drought will encourage feeder cattle to continue to be pulled forward. That means the pace of feedyard placements will get tighter as spring melts into summer. In turn, that means tighter fed cattle supplies as the year draws to a close. Beyond that, CattleFax predicts lighter harvest weights for both fed cattle and culls. Taking everything into account, the net-net is smaller beef production year Continued on page 18 